Subprime Turmoil Strikes Countrywide
By Consumer Attorney on Jan 10, 2008 in Uncategorized
News of a “re-created” letter hit the the national media outlets on November 8th. Related rumors of bankruptcy have been picking up steam. Countrywide has also been beset by accusations that it is mishandling mortgage payments made by consumer debtors who are under Chapter 13 bankruptcy protection.
In response, Countrywide’s stock price took a dive on November 8th, losing more value in one day than it has since the infamous “Black Monday” in October 1987. Countrywide shares were down 28%, or $2.17 to $5.47 per share, a level which the shares have not seen since July of 1996.
What is shocking about Countrywide’s fall is that it has occurred so suddenly. As recently as February 2, 2007, Countrywide’s stock price had hit an all time high of $45.03 per share with a market cap of $26 Billion USD. This means that $23 Billion USD of shareholder value has evaporated within 11 months with Countrywide losing 88% of its market value. This is absolutely stunning, considering the fact that the sub-prime collapse had already begun to percolate by February of last year.
Analysts are speculating what may become of a beleaguered Countrywide with hindered access to the credit markets and a slumping housing market taking a chunk out of operating revenue. Many believe that Bank of America, which invested $2,000,000,000 in Countrywide in August to help it through the credit crunch, may play a significant role in any potential bailout, bankruptcy or fire-sale.
Countrywide representatives continue to stridently deny any trouble at the company.
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